Mumbaikars being forced to pay extra for fuel

Are Mumbai's consumers being forced to shell out extra money for fuel? The Comptroller and Auditor General of India (CAG) has pointed to how recovery of fuel cess continued even after recovery of costs on construction of flyovers in Mumbai and extended suburbs, leading to an excess financial burden on the toll paying people.

In its report on public sector undertakings (PSUs) for the year-ending March 31, 2015, the CAG noted that to decongest vehicular traffic, the state government assigned construction of the flyover projects in Mumbai to the Maharashtra State Road Development Corporation Limited (MSRDC). The costs incurred on these projects were to be recovered through toll, advertising and fuel cess on sale of petrol and diesel in Mumbai, Thane and Navi Mumbai Municipal Corporation areas.

The MSRDC constructed 37 flyovers at a total cost of Rs1,065.25 crore (excluding interest during construction of Rs167.70 crore). The MSRDC started toll collection at five Mumbai Entry Points (MEP) from 1999-2000 onwards through private contractors and had collected Rs 1,058.66 crore up to October 2010.

The MSRDC also received from the state government, fuel cess levied at one per cent of the cost of petrol and three per cent of the cost of diesel in Mumbai and adjoining towns since 22 January 2000, which amounted to Rs536.44 crore up to March 2011.

The MSRDC submitted a proposal in in November 2008 to the cabinet sub-committee on infrastructure to recover Rs2,100 crore by way of securitisation of toll rights on five Mumbai Entry Points (MEP) for retiring its outstanding borrowings and the cost of proposed Peddar Road flyover and Sion Panvel Highway.

"While working out the cash flow for awarding the securitisation of toll rights contract, the Company had projected a toll revenue of Rs6,738 crore for 18 years period from 2009-10 to 2026-27, whereas the outstanding expenditure to be recovered as on 2009-10 was worked out at Rs2,366.36 crore for the completed 37 projects by applying an Internal Rate of Return (IRR) of 16.12 per cent.

"The Company awarded the contract for securitisation of toll rights for a period of 16 years from 20 November 2010 to 19 November 2026 to MEP Infrastructure Private Limited, Mumbai (MEPIPL) for an upfront receipt of Rs2,100 crore. The Agreement with MEPIPL was executed in November 2010 after due approvals by the GoM and receipt of the upfront amount," the report, which was submitted to the state legislature on Friday noted.

"We observed that taking in to account the IRR at 16.12 per cent for the project cost as approved by GoM (Government of Maharashtra) on the Company's proposals, the entire project cost stood recovered in November 2010 itself with the securitised amount of Rs2,100 crore and cess received, yet the Company continues to receive the fuel cess from GoM. The excess cess burden of the public was therefore financially not justified," it said.

The MSRDC added that the securitisation of toll collection rights applying IRR of 16.12 per cent was approved by the GoM and there were delays in receipt of the fuel cess from the government.

"We therefore recommend that the GoM may consider discontinuation of the fuel cess as the entire project cost stood recovered in November 2010 itself with the upfront receipt of Rs2,100 crore and the cess received by them.

The matter was reported to the Government (December 2015) and their reply was awaited (January 2016)," the CAG said.

Need to implement water transport system

The CAG noted that the proposal to implement a water transport system in Mumbai could not be implemented even after 16 years due to indecision of the Government. Moreover, infructuous expenditure of Rs20.95 crore on appointment of consultants was incurred since the project was withdrawn from the MSRDC.

The state government in June 1999 appointed the Maharashtra Maritime Board (MMB) as an implementing agency for developing the system on Mumbai's coast. MMB conducted surveys, prepared Detailed Project Report (DPR) and invited tenders for implementing the project. However, before awarding the work, the government in 2002 transferred the project to the MSRDC. Without finalising the tenders proposed by MSRDC, the state again transferred the project for implementation to MMB in June 2015.

"The Company (MSRDC) stated (January 2016) that the decisions were taken by GoM. The reply of the company indicated the weakness on the part of Company in not conceptualising the project within a span of 10 to 13 years despite being transferred to them. Besides, the indecision of the GoM, even after the lapse of 16 years, as regards its willingness to go ahead with the project and deciding the implementing agency, the project as envisaged could not be implemented. The facts remained that an expenditure of Rs20.95 crore incurred by the Company mainly on consultants for various surveys, feasibility studies etc became infructuous," the report noted.

MMRC's infructuous expenditure of RS 4.71 crore

The Mumbai Metro Rail Corporation (MMRC) appointed an Independent Engineer (IE) without resolving environmental issues related to the 32-km Metro line-II (Charkop- Bandra- Mankhurd) which resulted in infructuous expenditure of RS 4.71 crore.

"Since the environmental clearances were not received and the project had become a non-starter, the GoM (Government of Maharashtra) decided (November 2014) to terminate the contract at no cost to either parties. Consequently, the entire payment of Rs4.71 crore made to the IE from October 2011 to June 2013 became infructuous. The work done/services rendered by IE was not verifiable," the report said.